Smells a Lot Like 1999…cue Nirvana

It’s starting to feel a lot like 1999.   Just ask any Bay Area resident who lived through the dot-com boom and bust.   Skyrocketing rents, new IPOs coming faster than we can count them, intense competition for talent, and a stock market at an all time high, are just a few of the parallels that are leading to this eerie feeling of déjà vu.  So as we get ready to celebrate with fireworks this weekend, one can’t help but ask the question: Are we on the verge of a larger economic IM-plosion?

I’m not an economist, and I’m certainly not here to predict the imminent collapse of the most recent tech boom.  That said, I think we can all agree on a few simple truths: we are in a bull market that is getting a little long in the tooth; economic cycles do not go up forever, and we are seeing increasing numbers of analysts starting to question some of the current company valuations.   While we may not be on the verge of a crash, it’s getting late and some of the guests are drunk and overstaying their welcome.

Who is most vulnerable?  I personally believe that an economic slow-down would have very little impact for the majority of those people working in Internal Audit or GRC roles for major companies.  This is consistent with the post-dot-com and GFC meltdowns.  From a career perspective, it seems that two groups are most vulnerable.  Certainly those people who are working in new tech, and particularly companies that have not demonstrated a clear path to profitability.  We learned in 2000 that when the tide turns, it can turn quickly (remember pink-slip parties?).

Second, there may be some vulnerability in Big 4 and other public accounting firms that have become heavily reliant on revenue from SOC reports (much as they were on SOX revenues leading into the GFC).  A precipitous decline in the number of companies needing SOC reports could have an impact on their bottom line.

What to do:

  • Evaluate your personal risk. If you are in the early to middle part of your career (think Senior Auditor/Consultant or Manager), are well credentialed and have acquired some deep areas of subject matter expertise, you are well positioned to weather any downturn.   If, however, you are in the very early part of your career (think first two years), the latter third of your career, and/or you have other marketability challenges (lack of credentials, choppy career history, lack of go-to skills), this could be a time to seek a safe haven.  Look to large stable companies with a history of profitability.
  • If working for (or thinking about working for) a startup or “emerging” company, take a good hard look at fundamentals. This would be a time to watch your company’s performance much more closely.   Take a good hard look at the financials, but also analyze trends.  It is also smart to keep an eye on competitors and/or companies in related niches as they can often be a bellwether.
  • Ask yourself if you are on a ship without a career path. During the 1990s tech boom, there were a lot of people who left Big 4 for very cool-sounding positions at startup companies – much as been happening over the past five years.  But when the downturn came, and there were very few of those positions to be found, many of these professionals were not quickly and easily absorbed back into their initial career path.  Audit, Compliance, Data Analytics, and Information/Cyber Security are all legitimate career paths that should fare reasonably well in a downturn.  However, that very cool sounding and loosely defined “strategy” role at a startup company may not be.   If you’ve already taken the plunge into one of those uber-cool (no pun intended) tech jobs,  maintaining relevant professional credentials (CPA, CISA, CIA, CISSP) and continuing to stay abreast of events in your old field can also help insulate you against risk and aid reintegration in a time of need.

For a more detailed perspective on some of the similarities between the current environment and end of the dot-com boom, check out  Andrew Wilkinsen’s piece at Medium.com: https://medium.com/@awilkinson/we-need-to-talk-about-startups-de611d6a7373 .

By | 2015-07-02T18:05:40+00:00 July 2nd, 2015|